Whole Foods to cut 1,500 jobs

Published 5:09 pm, Monday, September 28, 2015

Whole Foods is cutting about 1,500 jobs, or 1.6 percent of its workforce, over the next eight weeks.

Whole Foods is cutting about 1,500 jobs, or 1.6 percent of its workforce, over the next eight weeks.

Photo: Elise Amendola, Associated Press

Whole Foods to cut 1,500 jobs

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AUSTIN, Texas — In a rare move, Austin-based Whole Foods Market says it will cut 1,500 jobs in the next two months in the midst of a challenging year for the retailer.

Whole Foods said it is making the cuts “as part of its ongoing commitment to lower prices for its customers and invest in technology upgrades while improving its cost structure,” according to a U.S. Securities and Exchange filing on Monday.

The organic foods giant, which its website says employs 91,000, said it will reduce the positions over the next eight weeks. The reduction represents 1.6 percent of the company’s workforce, the retailer said.

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The job cuts will come as a result of attrition and Whole Foods suggested that workers who lose their jobs could still find other positions with the retailer.

Whole Foods “anticipates many of the reductions to be managed through natural attrition and expects a significant percentage of affected Team Members will find other jobs from the nearly 2,000 open positions across the company or via new jobs created from the more than 100 new stores in development,” the company said in its filing.

Whole Foods is one of Austin’s highest-profile companies with more than 2,500 employees in Central Texas and has 431 stores worldwide. It appeared the job reductions are scheduled to occur company-wide with no plans detailed for a significant share of the 1,500 cuts to occur in any one city or region.

In the past year, Whole Foods has added 9,000 jobs and created nearly 35,000 in the past five years, the company said.

“This is a very difficult decision, and we are committed to treating affected Team Members in a caring and respectful manner. We have offered them several options including transition pay, a generous severance, or the opportunity to apply for other jobs. In addition, we will pay these Team Members in full over the next eight weeks as they decide which option to choose,” Walter Robb, co-CEO for Whole Foods, said in the filing. “We believe this is an important step to evolve Whole Foods Market in a rapidly changing marketplace.”

The company has had several disappointing earnings releases in the past year and a somewhat turbulent year on Wall Street. The company has faced growing legal questions over findings by a New York consumer affairs agency accusing the organic foods giant of overpricing some of its products. Robb and co-CEO and co-founder John Mackey have confirmed the overcharging errors did occur in some cases and said they were taking immediate action to address the concerns. But that didn’t stop lawsuits from being filed in the matter.

The company is also facing new legal action from PETA, which has raised concerns over one of Whole Foods’ vendors.

And prior to those legal claims, the company was already wrangling with questions over its listed sugar content in its 365 Everyday Value Plain Greek Yogurt.

Other challenges came from a group of vocal farmers in early June, who faced off with the company, saying that a new produce rating system would hurt the industry.

In its most recent earnings call, executives said the retailer was hurt by the overpricing claims and saw its sales dip soon after the story went “viral.”

“We don’t know why the media ran wild with this, these are inadvertent errors,” Mackey said in an investor call this summer. “It just went viral in the media and it has hurt our trust, and we do feel like victims. ... Hopefully over time the basic integrity of our company will put this in the past.”

The company has also had a turbulent ride on Wall Street in the last year. After missing expectations for several earnings reports, the company has seen its stock suffer.

Despite the challenges, the company has held steadfast to its plans to continue its aggressive store count growth with traditional stores and a new chain of value-focused, smaller stores called 365 by Whole Foods Market.

It has reiterated in those plans that it expects to cross the 500-store mark in 2017 and eventually sees a demand for 1,200 U.S. locations. It also said it plans to open five 365 stores by the second half of 2016 and doubling that number by 2017.

The first store is scheduled to open in the Silver Lake suburb in northwest Los Angeles.